For a while people tried to do that. By law the tickets have to be transferable. However, scalping is illegal in IL unless they are licensed. As well, we do our best to limit the number of tables sold to any one CC, URL or email address. Impossible to fully police, but we try.
We also put in URL blockers, bot protection, and a captcha to avoid people locking up tables quickly.
well aware of that fact... but the scalability and margins are such that it's still a great business. If I charge flat $ 495 per month for a restaurant but save them $ 100k plus per year then I win all restaurants... incremental costs minimal on the dev side. Hosting is a pass through.
Our booze does not run 80% margins... more like 70% .... and labor crushes it beyond that. Restaurants are lucky to get 10% margins if you are smart. We do better, but we do tickets!
I'm taking a bit of a stab but flat pricing probably works well for you because the profile of a customer/restaurant doesn't vary that much. If a restaurant can't afford or justify $495 per month, they probably aren't a good fit for your product.
'3 full time employees answering phones' was your starting point. I assume that a restaurant with more than 5 is rare and a restaurant with less than 1 full time person on the phone is a bad fit.
You are not losing many potential customers under that size and you are not leaving too much on the table with huge customers.
If you were trying to sell a hotel booking software and wanted to target customers from BnB scale to resort scale, you would need some way of charging bigger customers more, even if the marginal cost to you was the same.
I think the point that Patrick is making with the margin on booze is that similarly to restaurant prices, software pricing (like restaurant pricing) is more "made up" than the price of manufactured goods where a 'rational' pricing model like cost plus can be employed. Most costs are fixed rather than marginal so pointing to the marginal cost is almost like saying software shouldn't cost money.
I think you demonstrate that by selling tickets. Instead of charging patrons by what they order, you charge them by when they come. The 'what' pricing was made up and you made up a different pricing that worked better.
You do have a sliding scale, in the form of the hosting cost pass through. Your average restaurateur is entirely unqualified to estimate the AWS hosting costs of your software in relation to his/her restaurant, so these costs are completely opaque. (As patio11 puts it, "Metered pricing is none of predictable, transparent, or fair.") You, on the other hand, probably have a very good idea of the costs relative to e.g. size or popularity of establishment. In the interests of transparent pricing, you ought to consider factoring these costs into your price and charge your customer a fixed predictable amount, tiered according to the relevant parameter.
Yeah, that's understandable, but personally I'd prefer the 20% just included in the total price of the ticket. The French Laundry does this; they just charge a flat $260 and there is no tipping. The tip is already priced into the $260.
Yes, but at Keller's restaurant it's not charged in advance -- it's just a "gratuity included" situation. The specific definition in the FLSA states that tips for an employee are "actually received by the employee", which is the main issue in counting prior ticket purchase as gratuity.
Also, Nick, if you're still reading -- do you think that the prepurchase model materially affects people's spending on e.g. upgrades and drinks? My wife and I did Alinea & Aviary on November, and I was definitely happier to spend a little more given that the original "purchase" was so many paychecks in the past.
well in fairness I had a bit of experience in software design -- ancient but relevant. We are redoing the entirety of the site now... keeping the good, improving the rest.
Sure... but the thing is this: you could just take small deposit against the final check. And vary the scale or application of that deposit. For example, putting in a $10 deposit could give you a $ 15 credit. That's just one example on how a 'normal' demand restaurant could use ticketing and dynamic, variable pricing.
It seems like in retrospect that tickets were a really smart idea that panned out nicely for your group. Why do you think nobody had done it on your scale before?
How well do you think a ticket scheme would work out for a "non-destination" restaurant? For, say, Lula or Nightwood, instead of Alinea or Elizabeth?
In the process of getting this stuff working, was there ever a point late in the game where you were worried that it just wasn't going to come together in time to get tickets working for the launch of Next?
I think it would work for almost any restaurant -- or for that matter any business or service that has time slots... think dentist, hair cutter, spa, etc. If a restaurant is less in demand then they can use pricing as an incentive, never charging a premium but going under baseline for quiet times.
Aviary is the example that I use because we never go all night to full capacity. We've done 350+ covers, but we could do more. Most Wednesdays we do 125-150. So take a non destination place, add in a deposit for prime slots or other perks, and I believe the psychology is that you can move patrons to those times.
I think the entire industry was afraid to take the risk that patrons would hate tickets -- you spend $ 2 million building a restaurant and you want to minimize risk. I felt Next had so many people interested in the concept that I could afford to take that risk... indeed in some ways it was concepted FOR the tickets because I was so nutty about them for a year or two before.
And yes, I was very very worried. Up for several days in a row beforehand. Didn't shower or shave... ate pizza, drank cheap wine. Usual stuff.
Funnily enough, we're working on scheduling for detailers and cleaning businesses (http://carwashy.com). We haven't look into ticketing because well, to be frank, most of our customers never really mention the problems you guys face. And looking at the data, no-shows account for less than 2% of bookings.
There is a common misconception as to what lean is. Lean has nothing to do with the size of the team, but rather has to do about keeping churn low. The true version of lean would have done a ticketing system using an Excel spreadsheet and a phone number - but kept the ticketing system exactly identical. This ultimately would allow you to prove your ticketing model without wasting time and money on a programmer.
</pedantic rant>
Either way, kudos...love your ambition and your willingness to share. This point Bottom line EBITDA profits are up 38% from previous average years. is a management consultant's wet dream. Nice one.
